The Rising Influence of Rising Affluence

[DewDiligence]

GE builds India locomotive factory in remote, impoverished area:

https://www.wsj.com/articles/ge-the-ultimate-global-player-is-turning-local-1498748430

Not long ago, GE could boast that the products it sold overseas were made in America. Robert Nardelli, a former GE executive who ran the transportation business in the early 1990s, recalls 300 locomotives ordered by China during his tenure were built in GE’s huge factory in Erie, Pa.

Now GE makes a more subtle argument in meetings with Trump cabinet officials. Overseas investments aren’t coming at the expense of U.S. workers they say, and, besides, they wouldn’t win the new contracts unless they agreed to manufacture abroad. The engines for all 1,000 locomotives to be assembled in Marhaura, for instance, will be built at GE’s Grove City, Pa., plant. “We can’t let people think it’s a zero-sum game—that a job in country X means one less job in the U.S.,” says GE Vice Chairman John Rice.

Today, many industrial-sector deals—which often involve governments—require 30% to 70% of a machine’s contents be produced domestically, GE executives say, a figure that has been rising in recent years.

… Not long ago, GE could boast that the products it sold overseas were made in America. Robert Nardelli, a former GE executive who ran the transportation business in the early 1990s, recalls 300 locomotives ordered by China during his tenure were built in GE’s huge factory in Erie, Pa.

…Selling new locomotives to Indian Railways, the government-controlled operator of its vast train network, has long ranked high on GE’s agenda. But GE wouldn’t make some major investments in India, in part because it worried about Indian bureaucratic inefficiency and political corruption. In the end, GE decided it had no other option.

The $2.5 billion order for 1,000 locomotives over 11 years is one of the largest deals ever for GE’s transportation unit, and its biggest order ever in India.

The company hedged its risk by agreeing with Indian Railways to build the factory as a joint venture, including a $15 million investment from the Indian partner. The plant, which will employ about 400 workers, is slated to begin assembling locomotives late next year.